Foodservice Operators Challenged by Slow Third Quarter Sales

PRESS RELEASE PR Newswire

Nov. 14, 2017, 08:23 AM

CHICAGO, Nov. 14, 2017 /PRNewswire/ -- The restaurant industry landscape continues to be challenging for leading operators, according to Technomic's compilation and analysis of third quarter earnings reports. To date, approximately 60 companies have released their third quarter financials and over half have reported declines in comparable quarterly sales. To learn more about how you can utilize Technomic's Digital Resource Library to track foodservices industry trends visit: https://www.technomic.com/available-studies/industry-reports

On average, publicly-held companies saw their third quarter comparable sales drop by 1.3%. Full service dining operators were the hardest hit with 24 of 32 companies posting negative quarterly comparable sales.

"As we look to the fourth quarter, expect modest improvements in comparable sales as operators face easier quarterly comparisons from the prior year and also begin to turn a corner on hurricane-related performance issues," states Kevin Schimpf, industry research manager at Technomic.

Here's a brief look at the operators who fared well in the third quarter and those who fell short:

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McDonald's has seen its U.S. comparable sales increase for three consecutive quarters, rising from a second quarter mark of 3.9% to 4.1% growth in the third quarter. National beverage and McPick 2 value promotions were noted as key factors driving sales growth.

Texas Roadhouse continues to be one of the few bright spots in the casual-dining segment, posting 4.5% comparable sales growth in the third quarter, propelled by customer traffic gains of 3.5%.

Chipotle posted 1% comparable sales growth in the third quarter, which marks three consecutive quarters with decelerating same-store sales. While year-to-date comparable sales growth stands at 8.3%, the company projects to close out 2017 with comparable sales of 6.5%.

Papa John's has now observed four straight quarters of decreasing comparable sales growth and is also facing widespread criticism over attributing its declining performance to falling NFL TV viewership and negative sentiment surrounding the league. The company posted 1% North American comparable sales growth in the third quarter with year-to-date growth registering at 1.5%.

The fast-casual segment continues to see a relative downturn in 2017 as eight of eleven publicly held fast-casual chains posted negative third quarter comparable sales including key segment players Shack Shake, Potbelly, and The Habit Burger Grill.

About TechnomicTechnomic Inc., a Winsight company, delivers a 360-degree view of the food industry. It impacts growth and profitability for clients by providing consumer-grounded vision and channel-relevant strategic insights. Its services range from major research studies and management consulting solutions to online databases and simple fact-finding assignments. Its clients include food manufacturers and distributors, restaurants and retailers, other foodservice organizations, and various institutions aligned with the food industry. Visit us at technomic.com.